Coke deal expands Monster’s reach around the world

As part of the transaction, Monster will own Coca-Cola's energy beverage brands, which include NOS and Full Throttle.

CORONA, CALIF. — The Monster Beverage Corp.’s arrangement with The Coca-Co. will give the energy beverage company access to Coke’s entire international system and allow the company to take a focused approach to growing its brands around the world, said Rodney Sacks, chairman and chief executive officer of the company.

On Aug. 14, Monster and Coke entered into a series of agreements. The Coca-Cola Co. acquired a 16.7% stake on Monster, and the companies agreed to swap several brands, including Coke’s energy beverage portfolio going to Monster, and Coke receiving several non-energy beverage brands from Monster. The total value of the entire transaction was $2.15 billion.

“We believe this is a unique opportunity,” Mr. Sacks said in a conference call with securities analysts on Aug. 15. “One of the challenges we have always had in the Coke system is the Coca-Cola Co., with their representatives obviously motivating the bottlers to promote and obviously, if they could, give preference to their brand. We’re sitting in different meetings going to the same people, same team, motivating them to give our brand preference. That conflict really gets eliminated, which we think is very important, and we think that will be helpful to us going forward.”

Mr. Sacks added that as his company’s relationship with Coca-Cola evolves Monster will start using the Coke bottling system to manufacture products around the world.

That “will obviously reduce or eliminate damages, issues and transport costs of shipping that we have been incurring up until now,” Mr. Sacks said.

Hilton Schlosberg, vice-chairman and president of Monster, said the acquisition of Coca-Cola’s energy brands also will open some new markets to his company.

“The purchase of the Coca-Cola Co.’s energy brands provides scale and platform synergies and a range of international geographies where Monster currently has limited presence,” he said. “It more than doubles the size of our energy business in a number of international geographies and establishes a strong presence in a number of additional countries.”

One target market Monster is eyeing is China.

“We obviously want to be there, we want to get there as quickly as we can,” Mr. Sacks said. “There’s a complex regulatory procedure to get through to register. But now that we have that partner that we really can work with and, really, we’re part of them and they’re part of us, we will get something like China going pretty quickly. But it is going to take time because of regulatory issues there.”